Jana Follows Ackman Northward, Shaking up Canada Inc.

First came Bill Ackman’s Pershing Square, with its brash–and wildly successful–proxy battle for strategic control of Canadian Pacific Railway Ltd., one of Canada’s oldest and most storied corporations. Now, another American hedge fund, Jana Partners LLC, is knocking on Canada Inc.’s door.

The Wall Street Journal’s Anupreeta Das reported late Monday that Jana has been accumulating a large stake in Agrium Inc., a giant in the world of agriculture and a huge Canadian corporate player, with a market cap of around $15 billion. Jana is less known on Bay Street than Mr. Ackman, who has tangled before north of the border.

But on Wall Street, Jana has racked up a number of big recent successes. Earlier this year, Marathon Petroleum said it would explore spinning off its pipeline operations and undertake a $2 billion stock buyback under pressure from Jana. The fund also joined with Ontario Teachers’ Pension Plan last year to push McGraw-Hill to separate its publishing and financial information businesses.

Jana has increased pressure on Agrium to cut costs and spin off its retail-distribution arm, Ms. Das reports here

REUTERS

, citing people familiar with the discussions. Jana’s stake in Agrium was valued at about $650 million as of June 30. People familiar with the matter told The Journal that the firm’s stake is now a little less than 5%. Details are expected later this week.

Agrium, like Canadian Pacific before it, has come back swinging. Early Tuesday morning, after the Journal report, Agrium said it was committed to its business strategy and had no intention of selling its retail-distribution division.

Calgary, Alberta-based Agrium said its board has studied the possibility of spinning off the retail business and “unanimously determined that it is contrary to the best interests of the company and its shareholders. Spinning off (the division) would expose Agrium shareholders to substantial risk with no sustainable benefit, and we will not be pursuing it,” Chief Executive Michael Wilson said in the statement.

That sets the stage for another battle pitting an emboldened American investor against a Canadian board. Company executives are expected to meet with Jana officials later this week to discuss the fund’s proposals, The Journal reported.

But a proxy battle like Ackman vs. CP may not necessarily be in the cards. Jana typically doesn’t resort to such tactics, instead moving to work collaboratively with targeted firms. And Agrium’s share price isn’t the laggard that CP’s had been before Mr. Ackman swooped in. Since the first of the year, Agrium stock has climbed 43%.

About Canada Real Time

Canada Real Time provides insight and analysis into what’s making news in Canada, a country punching above its weight on the world stage thanks to its vast resources and strong banking sector. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, we take a look at developments in fields ranging from business to politics to culture. You can contact the editors at canadaeditors@dowjones.com